The OECD's March 2025 Interim Economic Outlook reveals a global economy at a critical juncture, with trade-driven inflation pressures and growth deceleration generating tailwinds for gold prices even as they create policy dilemmas for central banks.
"The global economy has shown some real resilience,” Secretary-General Mathias Cormann said. “However, some signs of weakness have emerged, driven by heightened policy uncertainty.”
The OECD projects global growth will slow to 3.1% in 2025, a downgrade from December's 3.3% forecast, and 3.0% in 2026, citing "heightened policy uncertainty" and "increasing trade restrictions [that] will contribute to higher costs both for production and consumption.” These tariffs threaten to reduce U.S. growth to 2.2% in 2025 and 1.6% in 2026, while Canada would see only 0.7% GDP expansion this year - a 1.3 percentage point cut from the prior 2% estimate.
The report also revises G20 inflation forecasts upward to 3.8% in 2025 and 3.2% in 2026 – a +0.3% increase from the December projections – noting that “services price inflation is still elevated amidst tight labour markets,” while core inflation in some advanced economies is projected to “exceed central bank targets... by 2026.”
The OECD also predicts that trade tensions will likely contribute to market instability, writing that rising inflation expectations and slowing growth could “trigger a rapid repricing in financial markets and a further rise in market volatility.”
While advocating continued rate cuts in economies with "underlying inflation projected to moderate and aggregate demand growth subdued," the OECD stressed the importance of containing inflation. “Central banks should remain vigilant given heightened uncertainty and the potential for higher trade costs to push up price pressures,” they wrote.
The OECD’s country-specific projections reveal a wide range of disparate impacts on inflation, growth, and the interest rate path. In the United States, projected headline inflation was revised to 2.8% in 2025 from 2.1% in December. In Canada, the suggested that tariffs could cause “interest rates [to] rise by 1 to 1.25%” compared to hikes of only 0.25 to 0.5% in other OECD countries. The report also projects Euro Area growth will be capped at 1.0% in 2025 despite easing inflation and lower interest rates.
The March Outlook identifies multiple risk factors, which would likely be supportive of higher gold prices. These include macroeconomic volatility, wherein “an unexpected downturn, policy change or deviation from the projected disinflation path could trigger market corrections, significant capital outflows, and exchange rate fluctuations,” concerns over debt sustainability, where “High public debt levels and elevated asset valuations further heighten these risks, and policy uncertainty, including “the risk of macroeconomic volatility... particularly in emerging markets.”
To mitigate the impacts of this worsening geopolitical and macroeconomic environment, the OECD outlined a bifurcated approach.
"Policy rate reductions should continue... provided inflation expectations remain well anchored, and trade tensions do not intensify further,” they suggested. However, the OECD cautioned against premature easing in tariff-exposed economies, emphasizing “decisive fiscal actions” to ensure debt sustainability.
After shooting up to a new all-time high of $3,038.35 at the North American market open on Tuesday, spot gold has continued to ride geopolitical conflict and trade tensions higher throughout the session as it remains within a few dollars of the new peak.
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Ernest Hoffman is a Crypto and Market Reporter for Kitco News. He has over 15 years of experience as
